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With recent high energy prices, the passage of major energy legislation in 2005 (P.L. 109-58) and
2007 (P.L. 110-140), and the passage of a new Farm Bill in 2008 (P.L. 110-246) there is ongoing
congressional interest in promoting alternatives to petroleum fuels. Biofuels—transportation fuels
produced from plants and other organic materials—are of particular interest.
Ethanol and biodiesel, the two most widely used biofuels, receive significant government support
under federal law in the form of mandated fuel use, tax incentives, loan and grant programs, and
certain regulatory requirements. The 24 programs and provisions listed in this report have been
established over the past 28 years, and are administered by five separate agencies and
departments: Environmental Protection Agency, U.S. Department of Agriculture, Department of
Energy, Internal Revenue Service, and Customs and Border Protection. These programs target a
variety of beneficiaries, including farmers and rural small businesses, biofuel producers,
petroleum suppliers, and fuel marketers. Arguably, the most significant federal programs for
biofuels have been tax credits for the production or sale of ethanol and biodiesel. However, with
the establishment of the renewable fuel standard (RFS) under P.L. 109-58, Congress has
mandated biofuels use; P.L. 110-140 significantly expanded that mandate. In the long term, the
mandate may prove even more significant than tax incentives in promoting the use of these fuels.
The 2008 Farm Bill—The Food, Conservation, and Energy Act of 2008—amended or established
various biofuels incentives, including lowering the value of the ethanol excise tax credit,
establishing a tax credit for cellulosic biofuel production, extending import duties on fuel ethanol,
and establishing several new grant and loan programs.
This report outlines federal programs that provide direct or indirect incentives for biofuels. For
each program described, the report provides details including administering agency, authorizing
statute(s), annual funding, and expiration date. The Appendix provides summary information in a
table format. This report supersedes CRS Report RL33572, Biofuels Incentives: A Summary of
Federal Programs.
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Introduction ..................................................................................................................................... 1
Environmental Protection Agency (EPA)—Renewable Fuel Standard ........................................... 1
Internal Revenue Service (IRS)....................................................................................................... 2
Volumetric Ethanol Excise Tax Credit ...................................................................................... 2
Small Ethanol Producer Credit.................................................................................................. 2
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and Refunds
http://www.irs.gov/publications/p510/ch02.html................................................................... 3
Biodiesel Tax Credit.................................................................................................................. 3
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and Refunds
http://www.irs.gov/publications/p510/ch02.html................................................................... 3
Small Agri-Biodiesel Producer Credit....................................................................................... 3
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and Refunds
http://www.irs.gov/publications/p510/ch02.html................................................................... 3
Renewable Diesel Tax Credit .................................................................................................... 3
For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and Refunds
http://www.irs.gov/publications/p510/ch02.html................................................................... 4
Credit for Production of Cellulosic Biofuel .............................................................................. 4
Special Depreciation Allowance for Cellulosic Biofuel Plant Property.................................... 4
Department of Agriculture (USDA) ................................................................................................ 5
Bioenergy Program ................................................................................................................... 5
Renewable Energy Systems and Energy Efficiency Improvements ......................................... 5
For more information: http://www.rurdev.usda.gov.................................................................. 6
Value-Added Producer Grants Program (VAPG) ...................................................................... 6
For more information: http://www.rurdev.usda.gov/rbs/coops/vadg.htm ................................. 6
Biorefinery Development Grants (Unfunded)........................................................................... 6
Business and Industry (B&I) Guaranteed Loans....................................................................... 7
For more information: http://www.rurdev.usda.gov/rbs/busp/b&i_gar.htm.............................. 7
Rural Business Enterprise Grants (RBEG) ............................................................................... 7
For more information: http://www.rurdev.usda.gov/rbs/busp/rbeg.htm.................................... 7
Other USDA Programs.............................................................................................................. 7
New Farm Bill Programs Under USDA .......................................................................................... 8
Biorefinery Assistance .............................................................................................................. 8
Repowering Assistance ............................................................................................................. 8
Bioenergy Program for Advanced Biofuels .............................................................................. 8
Feedstock Flexibility Program for Producers of Biofuels (Sugar)............................................ 9
Biomass Crop Assistance Program (BCAP) ............................................................................. 9
Department of Energy (DOE) ....................................................................................................... 10
Biomass Research and Development Initiative....................................................................... 10
For more information: http://www.brdisolutions.com/default.aspx ........................................ 10
Biorefinery Project Grants ...................................................................................................... 10
For more information: http://www.eere.energy.gov/biomass/..................................................11
Loan Guarantees for Ethanol and Commercial Byproducts from Cellulose, Municipal
Solid Waste, and Sugar Cane ................................................................................................11
DOE Loan Guarantee Program ................................................................................................11
For more information: http://www.lgprogram.energy.gov/ ......................................................11
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Cellulosic Biofuels Production Incentive.................................................................................11
U.S. Customs and Border Protection—Import Duty for Fuel Ethanol.......................................... 12
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Table A-1. Federal Biofuels Incentives by Agency ....................................................................... 13
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Appendix. Summary of Federal Incentives Promoting Biofuels................................................... 13
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Author Contact Information .......................................................................................................... 16
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With recent high energy prices, the passage of the Energy Policy Act of 2005 (P.L. 109-58) and
the Energy Independence and Security Act of 2007 (P.L. 110-140), and the passage of the 2008
Farm Bill (P.L. 110-246), there is ongoing congressional interest in promoting greater use of
alternatives to petroleum fuels. Biofuels—transportation fuels produced from plants and other
organic materials—are of particular interest. Ethanol and biodiesel, the two most widely used
biofuels, receive significant federal support in the form of tax incentives, loan and grant
programs, and regulatory programs. The 2008 Farm Bill also modified existing incentives—
including ethanol tax credits and import duties—and established a new tax credit for cellulosic
biofuels. The Farm Bill also authorized new biofuels loan and grant programs, but these will be
subject to appropriations, likely starting with the FY2010 budget request.
This report outlines 24 current, expired, or pending federal programs and provisions (plus one
authorized but unfunded program) that provide direct or indirect incentives for biofuels. The
programs are grouped below by administering agency. The incentives for biofuels are
summarized in the Appendix. This information is compiled from authorizing statutes, committee
reports, and Administration budget request documents.
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• Administered by: EPA
• Established: 2005 by the Energy Policy Act of 2005, §1501 (P.L. 109-58);
expanded by the Energy Independence and Security Act of 2007, §202 (P.L. 110-
140)
• Scheduled termination: None
• Description: The Energy Policy Act of 2005 established a renewable fuel
standard (RFS) for automotive fuels. The RFS was expanded by the Energy
Independence and Security Act of 2007. The RFS requires the blending of
renewable fuels (including ethanol and biodiesel) in transportation fuel. In 2008,
fuel suppliers must blend 9.0 billion gallons of renewable fuel into gasoline; this
requirement increases annually to 36 billion gallons in 2022. The expanded RFS
also specifically mandates the use of “advanced biofuels”—fuels produced from
non-corn feedstocks and with 50% lower lifecycle greenhouse gas emissions than
petroleum fuel—starting in 2009. Of the 36 billion gallons required in 2022, at
least 21 billion gallons must be advanced biofuel. There are also specific quotas
for cellulosic biofuels and for biomass-based diesel fuel. On May 1, 2007, EPA
issued a final rule on the RFS program detailing compliance standards for fuel
suppliers, as well as a system to trade renewable fuel credits between suppliers.
EPA has not yet initiated a rulemaking on the lifecycle analysis methods
necessary to categorize fuels as advanced biofuels. While this program is not a
direct subsidy for the construction of biofuels plants, the guaranteed market
created by the renewable fuel standard is expected to stimulate growth of the
biofuels industry.
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Various tax credits and other incentives are available for the production, blending, and/or sale of
biofuels and biofuel blends. Tax credits vary by the type of fuel and the size of the producer.
Before the enactment of the Energy Improvement and Extension Act of 2008 (P.L. 110-343,
Division B), some of the credits allowed taxpayers to blend biofuels produced outside the United
States with conventional fuels, export the blended fuel, and claim the tax credit. Section 203 of
P.L. 110-343 effectively eliminated this so-called “splash-and-dash” practice by requiring that any
fuel eligible for the credit must be produced and/or used within the United States.
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• Administered by: Internal Revenue Service
• Established: 2005 by the American Jobs Creation Act of 2004, §301 (P.L. 108-
357); modified by the Food, Conservation, and Energy Act of 2008, §15331 (P.L.
110-246); further amended by the Energy Improvement and Extension Act of
2008 (P.L. 110-343, Division B), §203
• Scheduled termination: December 31, 2010
• Description: Gasoline suppliers who blend ethanol with gasoline are eligible for a
tax credit of 51 cents per gallon of ethanol.
• Qualified applicant: Blenders of gasohol (i.e., gasoline suppliers and marketers)
• For more information: IRS Publication 510, Chapter 2: Fuel Tax Credits and
Refunds http://www.irs.gov/publications/p510/ch02.html
• Note: The 2008 Farm Bill amended the credit: Starting the year after 7.5 billion
gallons of ethanol are produced and/or imported in the United States, the value of
the credit will be lowered to 45 cents per gallon—it is expected that the United
States will pass this mark in 2008, leading to a reduction in the credit starting in
2009.
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• Administered by: Internal Revenue Service
• Established:1990 by the Omnibus Budget Reconciliation Act of 1990, §11502
(P.L. 101-508); extended by the American Jobs Creation Act of 2004, §301 (P.L.
108-357); expanded by the Energy Policy Act of 2005, §1347 (P.L. 109-58);
amended by the Energy Improvement and Extension Act of 2008 (P.L. 110-343,
Division B), §203
• Scheduled termination: December 31, 2010
• Description: The small ethanol producer credit is valued at 10 cents per gallon of
ethanol produced. The credit may be claimed on the first 15 million gallons of
ethanol produced by a small producer in a given year.
• Qualified applicant: Any ethanol producer with production capacity below 60
million gallons per year
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• Administered by: Internal Revenue Service
• Established: 2005 by the American Jobs Creation Act of 2004, §302 (P.L. 108-
357); extended by the Energy Policy Act of 2005, §1344 (P.L. 109-58); amended
by the Energy Improvement and Extension Act of 2008 (P.L. 110-343, Division
B), §202-203
• Scheduled termination: December 31, 2009
• Description: Biodiesel producers (or producers of diesel/biodiesel blends) can
claim a per-gallon tax credit. The credit is valued at $1.00 per gallon. Before
amendment by P.L. 110-343, the credit was valued at $1.00 per gallon of “agri-
biodiesel” (biodiesel produced from virgin agricultural products such as soybean
oil or animal fats), or 50 cents per gallon of biodiesel produced from previously
used agricultural products (e.g., recycled fryer grease).
• Qualified applicant: Biodiesel producers and blenders
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• Administered by: Internal Revenue Service
• Established: 2005 by the Energy Policy Act of 2005, §1345 (P.L. 109-58);
amended by the Energy Improvement and Extension Act of 2008 (P.L. 110-343,
Division B), §202-203
• Scheduled termination: December 31, 2009
• Description: The small agri-biodiesel producer credit is valued at 10 cents per
gallon of “agri-biodiesel” (see Biodiesel Tax Credit, above) produced. The credit
may be claimed on the first 15 million gallons of ethanol produced by a small
producer in a given year.
• Qualified applicant: Any agri-biodiesel producer with production capacity below
60 million gallons per year
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• Established: 2005 by the Energy Policy Act of 2005, §1346 (P.L. 109-58);
amended by the Energy Improvement and Extension Act of 2008 (P.L. 110-343,
Division B), §202-203
• Scheduled termination: December 31, 2008
• Description: Producers of biomass-based diesel fuel made through a thermal
depolymerization process (or producers of diesel/renewable biodiesel blends) can
claim $1.00 per gallon tax credit. As defined by law, diesel fuel substitutes
produced through thermal processes are not considered “biodiesel,” and thus are
ineligible for the biodiesel credits.
• Qualified applicant: Renewable diesel producers and blenders
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• Administered by: Internal Revenue Service
• Established: January 1, 2009, by the Food, Conservation, and Energy Act of
2008, §15321 (P.L. 110-246)
• Scheduled termination: December 31, 2012
• Description: Producers of cellulosic biofuel can claim $1.01 per gallon tax credit.
For producers of cellulosic ethanol, the value of the credit is reduced by the
amount of the volumetric ethanol excise tax credit and the small ethanol producer
credit (see above)—currently, the value would be 40 cents per gallon. The credit
applies to fuel produced after December 31, 2008.
• Qualified applicant: Cellulosic biofuel producers
• Note: The credit for cellulosic ethanol varies with other ethanol credits such that
the total combined value of all credits is $1.01 per gallon. As the volumetric
ethanol excise tax credit and/or the small ethanol producer credits decrease, the
per-gallon credit for cellulosic ethanol production increases by the same amount.
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• Administered by: Internal Revenue Service
• Established: 2006 by the Tax Relief and Health Care Act of 2006, §209 (P.L. 109-
432); amended by the Energy Improvement and Extension Act of 2008 (P.L. 110-
343, Division B), §201
• Scheduled termination: December 31, 2012
• Description: A taxpayer may take a depreciation deduction of 50% of the
adjusted basis of a new cellulosic biofuel plant in the year it is put in service. Any
portion of the cost financed through tax-exempt bonds is exempted from the
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depreciation allowance. Before amendment by P.L. 110-343, the accelerated
depreciation applied only to cellulosic ethanol plants that break down cellulose
through enzymatic processes—the amended provision applies to all cellulosic
biofuel plants.
• Qualified applicant: Any enzymatic cellulosic ethanol plant acquired after
December 20, 2006, and placed in service before January 1, 2013. Any plant that
had a binding contract for acquisition before December 20, 2006, does not
qualify.
• For more information: See Senate Finance Committee, Summary of House-
Senate Agreement on Tax, Trade, Health, and Other Provisions, December 7,
2006.
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• Administered by: Commodity Credit Corporation (CCC)
• Annual funding: $100 million appropriated for FY2005, $60 million for FY2006;
up to $150 million authorized annually for FY2004 through FY2006
• FY2008 budget request: $0
• Established: FY2001 in response to Executive Order 13134 (August 12, 1999)
Developing and Promoting Biobased Products and Bioenergy, through CCC’s
general authority to conduct commodity programs; extended by the Farm
Security and Rural Investment Act of 2002, §9010 (P.L. 107-171)
• Termination: End of FY2006
• Description: The Bioenergy Program reimbursed ethanol and biodiesel producers
for expanding their production capacity. Payments helped defray the purchase
cost of the additional commodities needed for that expansion. The amount of
each payment was based on the change in production capacity, as well as the
number of applicants selected for funding. Eligible commodities included grain
and oilseed crops (e.g. barley, corn, soybeans), cellulosic crops (e.g. switchgrass,
rice hulls), animal fats, agricultural byproducts, and oils. For more information,
see “Bioenergy Program for Advanced Biofuels,” below.
• Qualified applicant: Any ethanol or biodiesel producer who expanded production
capacity
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• Administered by: Rural Business Cooperative Service
• Annual funding: $23 million for all projects through FY2007, including biofuels
projects; $36 million for FY2008
• FY2008 budget request: $34 million
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• Established: FY2003 by the Farm Security and Rural Investment Act of 2002,
§9006 (P.L. 107-171); funding authorization for FY2007 reduced to $3 million
by §1301 of the Deficit Reduction Act of 2005 (P.L. 109-171); full funding
restored by FY2007 Continuing Resolution (P.L. 110-5)
• Scheduled termination: End of FY2007
• Description: This program provides grants, loans, and loan guarantees for the
development of renewable energy projects and energy efficiency improvements.
The construction of a biofuel plant could be an eligible project. Grants are limited
to 25% of the costs of the project; loans are limited to 50% of the cost of the
project.
• Qualified applicant: Farmers, ranchers, and rural small businesses
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• Administered by: Rural Business Cooperative Service
• Annual funding: $15.5 million appropriated for FY2005; $20.5 million for
FY2006; $20.3 million for FY2007; $18.9 million for FY2008
• FY2008 budget request: $15 million
• Established: FY2001, expanded in FY2003 to include renewable energy projects
by the Farm Security and Rural Investment Act of 2002, §6401 (P.L. 107-171);
the Deficit Reduction Act of 2005, §1402 (P.L. 109-171), required that all
previously appropriated funds unobligated by October 1, 2006 be returned to the
Treasury
• Scheduled termination: End of FY2007; but program has been continued
• Description: VAPG provides grants to independent producers for the
development of value-added agricultural activities, including biofuel production.
The grants can be used for feasibility studies, the development of a business plan,
or to acquire working capital to operate a value-added business. Grants are
limited to $500,000 per recipient.
• Qualified applicant: Independent producer, producer group, cooperative, or a
majority-controlled producer-based business venture
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• Administered by: If funded, it would likely be administered by USDA’s Rural
Development Agency
• Annual funding: $0
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• Established: 2002 by the Farm Security and Rural Investment Act of 2002, §9003
(P.L. 107-171)
• Scheduled termination: End of FY2007
• Description: This program was established by the Farm Security and Rural
Investment Act of 2002 (P.L. 107-171); however, no funding has been provided.
If funded, the program would provide grants for the development and
construction of biorefineries, including those that produce biofuels.
• Qualified applicant: Virtually any non-federal entity (including a national
laboratory) or group of entities that plans to build a biorefinery
• For more information: N/A
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• Administered by: Rural Business Cooperative Service
• Annual funding: Approximately $1 billion in loans are guaranteed annually
• Scheduled termination: None
• Description: This program provides guarantees for up to 90% of a loan made by a
commercial lender. Loan proceeds may be used for working capital, machinery
and equipment, buildings and real estate, and certain types of debt refinancing.
• Qualified applicant: Virtually any legal entity.
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• Administered by: Rural Business Cooperative Service
• Annual funding: Approximately $40 million in each of FY2005 through FY2007;
$38.7 million for FY2008
• Scheduled termination: None
• Description: RBEG provides grants to finance and facilitate development of
small and emerging private rural business enterprises. The grant is awarded to a
third party to assist a business; grant funds do not go directly to the business.
• Qualified applicant: Public bodies, private nonprofit corporations, and federally
recognized Indian Tribal groups.
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assist biofuels producers indirectly:
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• Rural Economic Development Loan Program;
• Rural Development Loan Program;
• Rural Economic Development Grants.
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biofuels incentive programs. Funding for these programs has yet to be appropriated.
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• Annual funding: $75 million in mandatory funding for FY2009, and $245 million
in FY2010 for loan guarantees, plus $150 million authorized annually for
FY2009 through FY2012—appropriations pending
• Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001
(P.L. 110-246)
• Scheduled termination: End of FY2012
• Description: Loan guarantees and grants for the construction and retrofitting of
biorefineries to produce advanced biofuels.
• Qualified applicant: Individual, entity, Indian tribe, or unit of State or local
government, including a corporation, farm cooperative, farmer cooperative
organization, association of agricultural producers, National Laboratory,
institution of higher education, rural electric cooperative, public power entity, or
consortium of any of those entities.
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• Annual funding: $35 million in mandatory funding for FY2009, to remain
available until expended, plus $15 million authorized annually for FY2009
through FY2012—appropriations pending
• Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001
(P.L. 110-246)
• Scheduled termination: End of FY2012
• Description: Grants to biorefineries that use renewable biomass to reduce or
eliminate fossil fuel use.
• Qualified applicant: Biorefineries in existence at the date of enactment.
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• Administered by: To be determined
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• Annual funding: Mandatory funding of $55 million for FY2009, $55 million for
FY2010, $85 million for FY2011, and $105 million for FY2012, plus $25 million
authorized annually for FY2009-FY2012—appropriations pending
• Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001
(P.L. 110-246)
• Scheduled termination: End of FY2012
• Description: Provides payments to producers to support and expand production
of advanced biofuels.
• Qualified applicant: Producer of advanced biofuels
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• Administered by: Commodity Credit Corporation (CCC)
• Annual funding: Such sums as necessary are authorized to be appropriated—
appropriations pending
• Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001
(P.L. 110-246)
• Scheduled termination: None
• Description: Authorizes the use of CCC funds to purchase surplus sugar, to
ensure the sugar program operates at no-net-cost, to be resold as a biomass
feedstock to produce bioenergy.
• Qualified applicant: Producer of biofuels using eligible sugar as a feedstock
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• Administered by: Commodity Credit Corporation (CCC)
• Annual funding: Such sums as necessary are authorized to be appropriated for
FY2008 through FY2012—appropriations pending
• Established: 2008 by the Food, Conservation, and Energy Act of 2008, §9001
(P.L. 110-246)
• Scheduled termination: End of FY2012
• Description: Encourages biomass production or biomass conversion facility
construction with contracts that will enable producers to receive financial
assistance for crop establishment costs and annual payments for biomass
production. Producers must be within economically practicable distance from a
biomass facility. Also provides payments to eligible entities to assist with costs
for collection, harvest, storage, and transportation to a biomass conversion
facility.
• Qualified applicant: Owner or operator of contract acreage that is physically
located within a BCAP project area
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• Administered by: National Biomass Coordination Office (a joint DOE-USDA
program)
• Annual funding: $14 million per year through FY2007 ($12 million in FY2006);
$11 million for FY2008
• FY2008 budget request: $12 million
• Established: FY2001 by the Biomass Research and Development Act of 2000,
§307 (P.L. 106-224); program extended and mandatory appropriations provided
bythe Farm Security and Rural Investment Act of 2002, §9008 (P.L. 107-171);
program extended and funding authorization expanded by the Energy Policy Act
of 2005, §941 (P.L. 109-58)—currently authorized at $200 million per year
• Scheduled termination: End of FY2015
• Description: Grants are provided for biomass research, development, and
demonstration projects. Eligible projects include ethanol and biodiesel
demonstration plants.
• Qualified applicant: Wide range of possible applicants
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• Administered by: Office of Energy Efficiency and Renewable Energy
• Annual funding: For FY2008, $186 million appropriated for the biomass
program—not all of this funding will go toward biorefinery project grants
• FY2008 budget request: $179 million for entire biomass program
• Established: FY2001 through funding authorized in various statutes
• Scheduled termination: None
• Description: This program provides funds for cooperative biomass research and
development for the production of fuels, electric power, chemicals, and other
products.
• Qualified applicant: Varies from year to year, depending on program goals in a
given year
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• Administered by: DOE
• Annual funding: Not specified
• FY2008 budget request: $0
• Established: 2005 by the Energy Policy Act of 2005, §§1510, 1511, and 1516
(P.L. 109-58)
• Scheduled termination: Varies, depending on specific program
• Description: The Energy Policy Act of 2005 authorizes several programs to
provide loan guarantees for the construction of facilities that produce ethanol and
other commercial products from cellulosic material, municipal solid waste, or
sugar cane.
• Qualified applicant: Private lending institutions, to guarantee loans for the
construction of biofuels plants
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• Administered by: DOE
• Annual funding: $5.3 million for administrative expenses; authority for $38.5
billion in loan guarantees for energy projects in FY2008, including $10 billion
for renewable energy and energy efficiency
• FY2008 budget request: $2 million for administrative expenses
• Established: 2005 by the Energy Policy Act of 2005, Title XVII (P.L. 109-58)
• Scheduled termination: Not specified
• Description: Title XVII of the Energy Policy Act of 2005 authorizes DOE to
provide loan guarantees for energy projects that reduce air pollutant and
greenhouse gas emissions, including biofuels projects.
• Qualified applicant: Private lending institutions, to guarantee loans for clean
energy projects.
ȱȱDZȱhttp://www.lgprogram.energy.gov/
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• Administered by: DOE
• Annual funding: $25 million total authorized for all fiscal years
• FY2008 budget request: None
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• Established: 2005 by the Energy Policy Act of 2005, §942 (P.L. 109-58)
• Scheduled termination: Not specified
• Description: Section 942 of the Energy Policy Act of 2005 authorizes DOE to
provide per-gallon incentive payments for cellulosic biofuels until annual U.S.
production reaches 1 billion gallons or 2015, whichever is earlier. DOE accepted
comments on the program through July 14, 2006; DOE has yet to promulgate
regulations.
• Qualified applicant: Any U.S. cellulosic biofuel production facility that meets
applicable permitting requirements, as well as any financial requirements set by
DOE.
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• Administered by: U.S. Customs and Border Protection
• Annual funding: N/A
• Established: 1980 by the Omnibus Reconciliation Act of 1980 (P.L. 96-499);
amended by the Tax Reform Act of 1986, §423 (P.L. 99-514) extended by the Tax
Relief and Health Care Act of 2006, §302 (P.L. 109-432); further extended by the
Food, Conservation, and Energy Act of 2008, §15333 (P.L. 110-246)
• Scheduled termination: December 31, 2010
• Description: A 2.5% ad valorem tariff and a most-favored-nation duty of $0.54
per gallon of ethanol (for fuel use) applies to imports into the United States from
most countries; most ethanol from Caribbean Basin Initiative (CBI) countries
may be imported duty-free.
• Covered Entities: Fuel ethanol importers
• For more information: CRS Report RS21930, Ethanol Imports and the
Caribbean Basin Initiative (CBI), by Brent D. Yacobucci; Senate Finance
Committee, Summary of House-Senate Agreement on Tax, Trade, Health, and
Other Provisions, December 7, 2006.
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Table A-1. Federal Biofuels Incentives by Agency
Original
Administering
Authorizing
Agency Program
Description
Legislation FY2008
Expiration
Appropriation Date
Environmental
Renewable
Mandated use of renewable
P.L. 109-58
N/A None
Protection
Fuel Standard fuel in gasoline: 4.0 billion
§1501
Agency
gallons in 2006, increasing to
7.5 billion gallons in 2012
Internal
Volumetric
Gasoline suppliers who
P.L. 108-357 N/A
End of 2010
Revenue Service Ethanol Excise blend ethanol with gasoline
§301
Tax Credit
are eligible for a tax credit of
51 cents per gallon of
ethanol. The credit will
decrease to 45 cents per
gallon in the year after U.S.
production and imports
exceeds 7.5 billion gallons—
it is expected that this
requirement will be met in
2008, reducing the credit in
2009.
Small
Ethanol
An ethanol producer with
P.L. 101-508 N/A
End of 2010
Producer
less than 60 million gallons
Credit
per year in production
capacity may claim a credit
of 10 cents per gallon on the
first 15 million gallons
produced in a year
Biodiesel
Tax
Producers of biodiesel or
P.L. 108-357 N/A
End of 2009
Credit
diesel/biodiesel blends may
claim a tax credit of $1.00
per gallon of biodiesel.
Small
Agri-
An agri-biodiesel (produced P.L. 109-58
N/A
End of 2009
Biodiesel
from virgin agricultural
Producer
products) producer with less
Credit
than 60 million gallons per
year in production capacity
may claim a credit of 10
cents per gallon on the first
15 million gallons produced
in a year
Renewable
Producers of renewable
P.L. 109-58
N/A
End of 2009
Diesel Tax
diesel (similar to biodiesel,
Credit
but produced through a
different process) may claim
a tax credit of $1.00 per
gallon of renewable diesel.
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Original
Administering
Authorizing
Agency Program
Description
Legislation FY2008
Expiration
Appropriation Date
Credit
for
Producers of cellulosic
P.L. 110-246 N/A
End of 2012
Production of biofuel may claim a tax credit
Cellulosic
of $1.01 per gallon. For
Biofuel
cellulosic ethanol producers,
the value of the production
tax credit is reduced by the
value of the volumetric
ethanol excise tax credit and
the small ethanol producer
credit—the credit was
originally valued at 40 cents
per gallon, but is likely to
increase to 46 cents per
gallon in 2009 (as the
Volumetric Ethanol Excise
Tax Credit is expected to
decrease by 6 cents per
gallon). The credit applies to
fuel produced after
December 31, 2008.
Special
Plants producing cellulosic
P.L. 109-432 N/A
End of 2012
Depreciation biofuels may take a 50%
Allowance for depreciation allowance in
Cellulosic
the first year of operation,
Biofuel Plant
subject to certain
Property
restrictions
Department of Bioenergy
Reimburses ethanol and
P.L. 107-171 $0 Expired:
Agriculture
Program
biodiesel producers for
§9010
End of
feedstocks necessary to
FY2006
expand operations
Renewable
Grants, loans, and loan
P.L. 107-171 $36 million
Scheduled:
Energy
guarantees for the
§9006
End of
Systems and
development of renewable
FY2007
Energy
energy projects and energy
Efficiency
efficiency improvements
Improvements
Value-Added
Grants to independent
P.L. 107-171 $19 million
Scheduled:
Producer
producers for the
§6401
End of
Grants
development of value-added
FY2007
agricultural activities,
including biofuel production
Biorefinery
If funded, would provide
P.L. 107-171 $0 Scheduled:
Development grants for the development
§9003
End of
Grants -
and construction of
FY2007
Unfunded
biorefineries, including
biofuel plants
Business
and
Loan guarantees for various Various
Approx. $1
None
Industry (B&I) projects—could be used for statutes
billion
Guaranteed
biofuels
Loans
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Original
Administering
Authorizing
Agency Program
Description
Legislation FY2008
Expiration
Appropriation Date
Rural
Business
Grants to finance and
Various
Approx. $40
None
Enterprise
facilitate development of
statutes
million
Grants
small and emerging rural
business enterprises
New Farm Bill
Biorefinery
Loan guarantees and grants
P.L. 110-246 No
End of
Programs under Assistance
for the construction and
§9001
appropriation
FY2012
USDA
retrofitting of biorefineries
to date
to produce advanced
biofuels
Repowering
Grants to biorefineries that
P.L. 110-246 No
End of
Assistance
use renewable biomass to
§9001
appropriation
FY2012
reduce or eliminate fossil
to date
fuel use
Bioenergy
Provides payments to
P.L. 110-246 No
End of
Program for
producers to support and
§9001
appropriation
FY2012
Advanced
expand production of
to date
Biofuels
advanced biofuels
Feedstock
Authorizes the use of CCC
P.L. 110-246 No
None
Flexibility
funds to purchase surplus
§9001
appropriation
Program for
sugar, to be resold as a
to date
Producers of biomass feedstock to
Biofuels
produce bioenergy
(Sugar)
Biomass
Crop
Provides financial assistance P.L. 110-246 No
End of
Assistance
for biomass crop
§9001
appropriation
FY2012
Program
establishment costs and
to date
(BCAP)
annual payments for biomass
production; also provides
payments to assist with costs
for biomass collection,
harvest, storage, and
transportation
Department of Biomass
Grants for biomass research, P.L. 106-224 $11 million
End of
Energy
Research and development, and
FY2015
Development demonstration projects
Initiative
Biorefinery
Funds cooperative R&D on
Various
$186 million
None
Project
biomass for fuels, power,
statutes
total for
Grants
chemicals, and other
biomass R&D
products
program
Loan
Several programs of loan
P.L. 109-58
No
Varies
Guarantees
guarantees to construct
§§1510, 1511, appropriation
for Ethanol
facilities that produce
and 1516
to date
and
ethanol and other
Commercial
commercial products from
Byproducts
cellulosic material, municipal
from Various solid waste, and/or
Feedstocks
sugarcane
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Original
Administering
Authorizing
Agency Program
Description
Legislation FY2008
Expiration
Appropriation Date
DOE
Loan
Loan guarantees for energy
P.L. 109-58
$10 billion in
None
Guarantee
projects that reduce air
Title XVII
loan authority
Program
pollutant and greenhouse gas
for renewable
emissions, including biofuels
energy and
projects
energy
efficiency
Production
Authorizes DOE to provide P.L. 109-58
No
August 8,
Incentives for per-gallon payments to
§942
appropriation
2015
Cellulosic
cellulosic biofuel producers
to date
Biofuels
U.S. Customs
Import Duty
All imported ethanol is
P.L. 96-499
N/A
End of 2010
and Border
for Fuel
subject to a 2.5% ad valorem
Protection
Ethanol
tariff; fuel ethanol is also
subject to a most-favored-
nation added duty of 54
cents per gallon (with some
exceptions)
Source: CRS.
ȱȱ ȱ
Brent D. Yacobucci
Specialist in Energy and Environmental Policy
byacobucci@crs.loc.gov, 7-9662
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